Family businesses are ‘unsung heroes’ of the global economy, with increased sales and aggressive five-year growth plans, says PwC

  • 58% of family firms in Singapore have grown sales in past year
  • Shortage of skills pose a larger concern compared to market conditions for Singapore firms
  • Singapore family businesses feel that the government recognises the importance of family business
  • Singapore family businesses more likely to sell or float their business than family businesses across the world

Singapore, 25 October 2012 – Two thirds of family firms around the world have grown their sales in the past year, and even more are confident that their ambitious growth targets for the next five years will be met. However, family businesses continue to face the perennial problem of recruitment of skilled staff and planning for succession.  

These are just some of the findings of PwC’s 2012 Family Business Survey, which surveyed 1,952 family business executives 28 countries worldwide.

Family businesses are thriving globally, with 65% having grown sales in the past year, compared to less than half in 2010 when PwC last conducted the survey. This sales growth has been particularly strong in Eastern Europe, Latin America and the Middle East. Only 19% saw a reduction in sales over the last year, compared to 34% two years ago.

Ng Siew Quan, PwC Singapore Private Client Services Leader, said: “Our survey clearly shows that family businesses play a vital role in contributing to the economy. Even in this uncertain economic environment, 58% of Singaporean family businesses achieved sales growth in the last year. Singapore family firms are bullish on their growth aims in the next five years, with virtually all businesses indicating their confidence in achieving steady or quick and aggressive growth. However, issues like access to finance, securing talent and succession management remain key challenges for them.”

Challenges
Globally, one of the biggest challenges facing family-owned businesses is the recruitment of skilled staff, globally cited by 43% this year compared to 38% in 2010. Nearly 60% say attracting the right skills/talent will be a key challenge over the next five years, and nearly half say they will struggle to retain key staff in the same time period.

Family businesses in Singapore were more likely than the rest of the world to identify attracting the right skills and talent as a key challenge. Out of the Singapore respondents surveyed, 76% cited staff recruitment as a key internal issue facing the business. 38% cited market conditions as a key external issue.

Challenges around succession continue to be front-of-mind, often further compounded by family conflict/politics, and the need to attract and motivate non-family staff. In Singapore, the survey revealed that only 36% of the family businesses have a shareholders’ agreement in place, and 32% have no procedures in place to deal with conflict.

Mr Ng said, “In a family business, relationships are naturally tied to the health of the enterprise. In a worst-case scenario, a family feud can ruin a company, so this statistic should be a concern. Apart from being good business sense, it is also a matter of good corporate governance for this group of businesses to implement procedures that address family conflict.”

The survey also revealed that Singapore family businesses were more likely to sell or float the business than family businesses across the world. 30% of respondents said they would sell the company via IPOs or sale to private equity investors as preferred routes.

“One of the main reasons given for not passing the business down was that the next generation would not want to get involved with running the company,” said Mr Ng. “ Family businesses need to behave like large corporations if they want to compete on a global stage. This means they need to engage their successors and professionalise their business further. It is this need that we hope to address in our development programmes for next generation leaders in family businesses.”

Advantages
Family businesses believe their structure offers significant advantages and benefits – particularly their agility/flexibility, continuity and the longer-term perspective. They cite the key role they play in job creation, the stability they bring to a balanced economy, and their entrepreneurial nature.

They also believe they have developed a stronger set of values than other businesses. 78% of Singapore respondents believe they battle hard to retain staff even in the bad times, and they have a strong commitment to supporting employment and community issues.

Mr Ng said: “The survey highlights the unique qualities of family businesses, and how they capitalise on these in their business approach. Family businesses take a longer-term approach to decision-making, and believe that they have a greater sense of responsibility when it comes to job creation and retention – even during tough times. They are also more entrepreneurial in the sense that they are likely to take more risks and reinvent themselves with each generation.”

Role of government
Compared to the majority of other countries surveyed, family firms in Singapore were more likely to feel the government recognises their importance, and is also taking steps in this current climate to help them.

“In fact, Singapore has so many incentives that family businesses turn to us to help them identify those which are the most suitable for their own circumstances,” said Mr Ng.

However, Singapore respondents were keen for more support from the government in the following areas, to help them succeed:

  • Access to finance and/or tax relief that goes towards funding growth and development
  • Access to a large pool of skilled local employees or the ability to employ foreign talent without penalty
  • Support in overseas growth and development, for example smoothing the passage of internationalisation or breaking into new markets
  • Rebates on property rentals

Mr Ng said, “To compete in a global arena, family businesses need to address their vulnerabilities. This survey shows that family firms have the right qualities for long-term success. The ability to deliver sales growth even in a tough economic environment proves that they are resilient models for the 21st century.”

ENDS

Notes:

  1. The PwC Family Business Survey 2012 covers family companies with a sales turnover of more than US$5m in over 30 countries/regions: Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, India, Ireland, Italy, Malta, Mexico, the Middle East (several countries), Romania, Russia, Singapore, South Africa, South Korea, Sweden, Switzerland, Taiwan, Turkey, the UK and the US. Interviews with top executives in 1,952 companies took place between 7 June and 18 September 2012.
  2. The report on the findings of the Family Business Survey 2012 can be downloaded at http://www.pwc.com/fambizsurvey

 

Media contacts

Eugene Y Tan (Direct Line: +65 6236 3950, e-mail: eugene.y.tan@sg.pwc.com)
Suzanne JY Tan (Direct Line: +65 6236 4074, e-mail: suzanne.jy.tan@sg.pwc.com)
Lisa LY Chong (Direct Line: +65 6236 3972, e-mail: lisa.ly.chong@sg.pwc.com or pwcpress.sg@sg.pwc.com)